US embassy cable - 05ATHENS2693

C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 002693 
 
SIPDIS 
 
E.O. 12958: DECL: 10/12/2015 
TAGS: ECON, EFIN, PREL, GR, AMB 
SUBJECT: DEPUTY FINANCE MINISTER ON ATTRACTING INVESTMENT 
AND ON MACEDONIA NAME ISSUE 
 
 
Classified By: Ambassador Charles Ries for Reasons 1.4 (b,d) 
 
1.  (C) Summary.  The Ambassador discussed Greek efforts to 
attract more investment, as well as the Macedonia name issue, 
with Deputy Minister for Finance and National Economy 
Christos Folias on October 12.  On economics, Folias 
recounted the GoG's economic reform efforts, stressing that 
his major priority now was reducing Greece's famed level of 
red tape.  He hoped to have a concrete proposal submitted to 
Parliament by the spring of 2006. On Macedonia, Folias 
recommended, "speaking personally", that the U.S. should push 
the UN to float once again the name "Novo Makedonija 
(Skopje)" as acceptable to both Greeks and Macedonians.  As 
for process, Folias recommended giving the two sides a 
specific time limit within which they would be required to 
find a solution to the problem: "We need to solve this 
problem and move on." 
 
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Macedonia Name Issue: Why Not Novo Makedonija (Skopje)? 
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2.  (C) Stressing that he was speaking personally, Folias 
said he was disappointed that the Macedonia name issue was 
weighing on positive U.S.-Greek bilateral relations.  He felt 
Greece had made a mistake in the 1990s when the name Novo 
Makedonija (Skopje) had originally been proposed, and thought 
that the name should once again be put into play.  This was a 
name both sides could accept: the Macedonians because it 
contained the word "Makedonija," and the Greeks because it 
was written in a foreign and non-English language.  He 
thought Greece would never accept the dual name proposal 
recently put forth by the UN's Matthew Nimitz.  As for 
process, he also panned Nimitz's methods, proposing instead 
to issue a clear timetable to resolve the issue, and putting 
the appropriate decision-makers into a secluded place to 
hammer out a compromise.  In any case, Folias stressed, 
resolving this issue was clearly in the direct interest of 
both Macedonia and Greece.  The Ambassador said he 
appreciated Folias' honesty and openness, and stressed that 
the U.S. priority was to find a solution acceptable to both 
sides, not pushing any particular name. 
 
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Folias Outlines Greek Economic Reform Priorities 
--------------------------------------------- --- 
 
3.  (SBU) Folias said that, as a former businessman, he was 
personally committed to Greek economic reform.  (Bionote: 
Folias ran a family dairy business and is a partner in the 
very successful Greek fast food chain "Goody's".  He also 
served four years in the European Parliament.)  Folias 
admitted that he had experienced the myriad of bureaucratic 
impediments that were keeping both domestic and foreign 
direct investment far lower than it should be.  He recalled 
the problems he used to go through getting the various 
approvals necessary to implement his business plans, such as 
having to pay Greek bureaucrats to "find" papers he had sent 
them that they had subsequently "lost."  This experience 
helped him deal with his own Ministry of Finance staff, who 
were wont to tell him reasons why his reform plans would not 
work. 
 
4.  (SBU) The Deputy Minister was optimistic that Greece's 
reforms were already bearing fruit.  In the five months since 
the passage of the Investment Incentive Law, the GoG had 
already approved incentive packages for 600 projects worth 
1.35 billion Euro.  Corporate taxes were on track to fall 
from 35% in 2003 to 25% in 2006.  This correspondingly lower 
cost of business would attract yet more investment, 
particularly from foreigners. 
 
5.  (SBU) Folias said he saw Greece as a high-income 
destination for foreign capital, one that did not rely on 
cheap labor.  The key to attracting investment depended on 
reducing red tape, he opined.  He had instructed his staff to 
document exactly what steps investors had to go through to 
get project approvals.  Once he had this information, he 
planned to take two additional steps: the first was to cut 
the necessary steps down to a minimum.  The second was to set 
up a central point of contact for potential investors. 
Folias admitted that he had first hoped to create a "one-stop 
shop" for such investors, but this had run aground on the 
opposition of other ministries.  Instead he was now looking 
at creating an "Investment Shopping Center", which would 
house representatives from all relevant ministries and fall 
under the aegis of the PM's office.  Interested investors 
would meet one person at the Center who would be in charge of 
shepherding the investment application through the rest of 
the Hellenic bureaucracy, all of which would have branch 
offices in the Center.  He hoped to have this plan submitted 
to Parliament by the spring of 2006. 
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U.S. Road Show 
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6.  (SBU)  Folias said he had just returned from a Greek 
business "road show" in Russia, and hoped to duplicate that 
show's success later in the U.S.  The Ambassador counseled 
Folias that, rather than take a large group of Greek 
businessmen to the U.S. it might be more effective to find a 
small number of GoG decision-makers who could efficiently 
present Greece's reform record to the U.S. business 
community. 
 
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Getting Greece's Use of EU Funds in Order 
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7.  (C)  Folias, whose portfolio includes overseeing EU 
structural funds for Greece as well as inward investment, 
told the Ambassador that he had encountered a difficult 
challenge upon assuming his portfolio.  Because of Greece's 
difficulty in implementing projects funded by EU structural 
funds in the correct manner, the EU had asked Greece at the 
beginning of 2005 to return 1.25 billion Euros in previously 
allocated funds.  Folias was proud of having convinced the EU 
to reduce this amount to 518 million Euros, to be paid in a 
series of four tranches ending in 2008.  He viewed the EU as 
a partner for Greece, one which should speak intelligently, 
but honestly, to the Greek people about changes that needed 
to be made.  Folias noted he had recently told Danuta 
Huebner, the EU's Commissioner for Regional Policy, that 
during her upcoming visit, she should not repeat Commissioner 
Almunia's maladroit handling of the Greek press, but this did 
not mean that she should be mealy-mouthed: "We need to hear 
the truth." 
 
RIES